ATG Reports Third Quarter 2008 Financial Results

Business Wire, Oct 28, 2008

Year-Over-Year, Revenue Increased 14%, Non-GAAP Net Income Grew 26%, and Cash Balances Increased 20%

CAMBRIDGE, Mass. -- Art Technology Group, Inc. (NASDAQ: ARTG), the leading e-commerce solutions provider, today reported financial results for the third quarter ended September 30, 2008.

Revenue for the third quarter of 2008 grew to $40.8 million, a 14% increase over third quarter 2007 revenue of $35.9 million.

"The overall market dynamics and demand in our business continue to be very positive as companies across a variety of industries invest in e-commerce," stated Bob Burke, ATG's president and CEO. "ATG had a solid third quarter and continues to execute well in what has become a difficult macroeconomic environment."

Product license revenue recognized in accordance with United States Generally Accepted Accounting Principles (GAAP) during the third quarter of 2008 was $10.8 million, compared to $7.9 million in the year ago quarter. Product license bookings, a non-GAAP measure which the company defines as product license revenue recognized plus net change in deferred product license revenue, grew to $9.5 million for the third quarter from $9.4 million in the year ago quarter. Approximately 43% of product license bookings in the third quarter were deferred and will be recognized ratably.

Seven new customers purchased ATG commerce solutions and 21 net new customers purchased eStara e-commerce optimization services this past quarter. New and repeat business was generated from customers including Deutsche Post, Direct Wines, JC Whitney, Premier Farnell, Vodafone, Williams-Sonoma, and Woolrich.

Net income in accordance with GAAP for the third quarter of 2008 was $786 thousand, or $0.01 per diluted share. This compares with a net loss of $760 thousand, or a loss of $0.01 per share, in the third quarter of 2007.

Non-GAAP net income increased to $3.9 million for the third quarter of 2008, or $0.03 per diluted share compared with non-GAAP net income of $3.1 million, or $0.02 per diluted share for the third quarter of 2007.

At September 30, 2008, ATG had $58.7 million in cash, cash equivalents, and short-term marketable securities. Cash flow from operations for the third quarter of 2008 was $8.1 million.

Julie Bradley, ATG's senior vice president and CFO stated, "While the fundamentals in our business remain strong, we recognize that these are challenging economic times. Therefore, we have taken proactive measures to more efficiently align our cost structure with the uncertainties around fourth quarter IT spending. As a result, we are narrowing our annual revenue guidance and managing our business to exceed the midpoint of our previously stated net income guidance."

Financial Guidance

Revenue is now expected be in the range of $159 - $162 million. GAAP net income (loss) for the year ending December 31, 2008 is expected to be in the range of $(2.0) million to breakeven. GAAP net income (loss) guidance includes an estimated $8.0 - $8.5 million of non-cash equity-related compensation expense and amortization of acquired intangibles of $4.0 - $4.5 million. Non-GAAP net income for the year ending December 31, 2008 is expected to be in the range of $10.0 million to $13.0 million. Product license bookings are now expected to grow 10% - 20% for 2008. The company is reiterating its cash flow from operations guidance. Cash flow from operations for 2008 is expected to be in the range of $28.0 million to $32.0 million.

Quarterly Conference Call

ATG management will discuss the company's third quarter 2008 financial results, recent highlights, and business outlook for the remainder of 2008 on its quarterly conference call for investors at 10:00 a.m. ET today. The conference call will be broadcast live over the Internet. Investors interested in listening to the webcast should log on to the "Investors" section of the ATG website, www.atg.com. The live conference call also can be accessed by dialing (866) 723-3575 (or (706) 634-8872 for international calls) and using conference ID No. 66991563. A replay of the call will be available on the company's website later in the day.

About ATG

A trusted, global specialist in e-commerce, ATG (Art Technology Group, Inc., NASDAQ: ARTG) has spent the last decade focused on helping the world's premier brands maximize the success of their online businesses. The ATG Commerce application suite is the top-rated platform by industry analysts for powering highly personalized, efficient and effective e-commerce sites. The company's platform-neutral e-commerce optimization services can be easily added to any Web site to increase conversions and reduce abandonment. These services include ATG Recommendations and eStara Connections. The company is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe For more information, please visit http://www.atg.com.

(c) 2008 Art Technology Group, Inc. ATG and Art Technology Group are registered trademarks of Art Technology Group, Inc. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners.